Suppose the Economy Is in Macroeconomic Equilibrium with Real GDP

question 110

Multiple Choice

Suppose the economy is in macroeconomic equilibrium with real GDP equal to Y*.If the government then implements an expansionary fiscal policy by increasing government purchases,what are the long-run effects on potential output?

• A)The growth rate of potential output may be reduced due to the crowding out of private investment.
• B)Potential output will adjust to the new higher level achieved with the expansionary fiscal policy.
• C)Potential output will drop below its starting point because of the crowding out of investment.
• D)The growth rate of potential output will rise due to the higher level of aggregate demand.
• E)The level of potential output is fixed and will not be affected by fiscal policy.

Appreciate the shift in understanding the etiology of autism spectrum disorder from psychogenic to biological factors.

Comprehend methods for detecting and assessing the severity of intellectual and developmental disabilities.

Recognize the challenges in treating autism spectrum disorder with biological interventions.

Understand the societal and educational implications of intellectual and developmental disabilities.

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Definitions:

Increase Production

A situation where a company or country grows its capability to produce goods or services, often in response to higher demand or improved efficiency.

Marginal Costs

The additional cost incurred from producing one more unit of a good or service.

Aggregate Supply Curve

The aggregate supply curve represents the total output of goods and services that firms in an economy are willing and able to produce at different price levels, holding all else constant.

Output Increases

A rise in the quantity of goods or services produced by an economy or firm over a specific period.